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Unformatted text preview: Unit 8: Decision Analysis II Conditional Probabilities Dining Chez Tethys: The Market Research Problem Joint and Marginal Probabilities Summary Conditional Probabilities Summary Statistical Independence Statistical Dependence Summary Conditional Probabilities in Decision Analysis Summary Exercise 1: Captain Ahab Fisheries Exercise 2: Mutually Exclusive and Collectively Exhaustive The Expected Value of Perfect Information Summary The Expected Value of Sample Information Summary Updating Prior Probabilities Summary Solving the Market Research Problem Exercise 1: The FUD Grocery Chain Exercise 2: PPD Immunity Introducing Risk Summary Risk Attitudes Summary Solving the Market Research Problem (II) Exercise 1: The Frivolous Lawsuit of D. Pitt At left you will see an outline of t covered in Unit 8: Decision Analy There are two homework problem associated with this unit. There is for each problem in this workboo you have completed the unit onli should attempt these problems a them to your coach for assessme feedback. The Value of Information Risk Analysis u will see an outline of the topics in Unit 8: Decision Analysis II. e two homework problems d with this unit. There is one tab problem in this workbook. Once completed the unit online, you ttempt these problems and submit your coach for assessment and . Purchased DVR Purchased Plasma Screen Yes No Plasma Screen 38 42 Not Plasma Screen 70 150 Total 108 192 Total 80 220 300 In a survey done by the local Better Buy questions were asked of 300 households purchased bigscreen televisions. The ta indicates the consumer's responses to w television purchased was a plasma scree whether they also purchased a DVR in th months. Q1a: What is the probability that a rand selected bigscreen television purchase sample is a purchase of a plasmascreen Q1b: What is the probability that a ran selected household that purchased a big television purchased a plasmascreen AN Q1c: What is the probability that a rand selected household purchased a DVR, gi household purchased a plasmascreen te one by the local Better Buy store, re asked of 300 households that actually gscreen televisions. The table at left consumer's responses to whether the rchased was a plasma screen and also purchased a DVR in the past 12 is the probability that a randomly screen television purchase in this urchase of a plasmascreen television? is the probability that a randomly sehold that purchased a big screen rchased a plasmascreen AND a DVR? is the probability that a randomly sehold purchased a DVR, given that the rchased a plasmascreen television? Payoff Table Good Economic Poor Economic Conditions Conditions 60% 40% $50,000 $30,000 100,000 40,000 30,000 10,000 Decision (Purchase) Apartment building Office building Warehouse An investor is to purchase one of three estate. The investor must decide amon apartment building, an office building, a warehouse. The future states of nature determine how much profit the investor good economic conditions and poor eco conditions. The profits that will result f decision in the event of each state of na shown at left. Q2a: Which investment has the highe Q2b: What is the expected value of pe information in this problem ? hase one of three types of real must decide among an an office building, and a re states of nature that will profit the investor will make are itions and poor economic its that will result from each of each state of nature are ent has the highest EMV? pected value of perfect oblem ? ...
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This note was uploaded on 02/01/2011 for the course FIN 398 taught by Professor Ramdeen during the Spring '06 term at FIU.
 Spring '06
 ramdeen
 Finance

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